Frequency Electronics, Inc. was founded in 1962 and
is now a well-established public company in Long Island, New
York, and trades on the NASDAQ Stock Exchange under the symbol
FEIM. It has six wholly-owned subsidiaries: FEI Communications
Inc. and FEI Government Systems Inc., located in Mitchel Field,
New York; Gillam-FEi a.s., located in Liege, Belgium, near
Brussels; FEI-Zyfer Inc., located in Garden Grove, California;
FEI-Asia Ltd., located in the free trade zone in Tianjin,
China. FEI and its subsidiaries are major worldwide suppliers
of Precision Time and Frequency (PT&F) products for ground,
seaborne, airborne, and space terminals and platforms used
by commercial and government/military systems suppliers.

In the mid-1990s, the Company transformed itself from a defense
contract manufacturer into a high-tech provider of precision
time and frequency products used to synchronize voice, data
and video transmissions in wireless communications systems.
These systems are found in both ground-based stations and
on-board commercial satellites. The Company also continues
to support the United States government with products for
defense orspace applications
but it will do so with more emphasis on COTS (commercial off-the-shelf)
products than on contract-based projects.

Terrestrial Wireless
The telecommunications industry is rapidly expanding with
new or improved technologies being developed to provide ever
more services to the public. Growing digital cellular systems
and PCS networks require more base stations to provide the
connectivity and quality of service that cell phone users
require. Cellular infrastructure original equipment manufacturing
companies, consisting of some of the world's largest telecommunications
companies, are building out existing networks even as they
develop new technologies, such as EDGE and 3G systems, to
provide not only improved voice connectivity but also Internet,
video and data transmission.

With increased demand for cellular services but limited
bandwidth, the requirement for precise timing becomes paramount.
FEI manufactures small Rubidium Vapor Atomic Oscillators as
well as temperature stable quartz crystal oscillators, which
are ideally suited for use in advanced cellular communications
base stations. Whether the network uses CDMA (Code Division
Multiple Access), TDMA (Time Division Multiple Access) or
GSM (Global System for Mobile Communications) or a hybrid,
such as EDGE, timing to ensure signal synchronization, is
of the essence.

Wireline Network
Synchronization
Todays worldwide digital telephone network infrastructure
operates on the Time Division Multiplexing (TDM) protocol.
TDM requires accurate and reliable synchronization systems
called TSGs (Timing Signal Generators) or synonymously SSUs
(Sync Supply Units). FEI is a major supplier of next generation
micro-processor controlled TSGs to network operators worldwide.
Not only does the backbone voice network require precise timing
at every stage of switching, multiplexing and relay, but data
transmission is also critically dependent on precise synchronization.
Data carried on the fiber optic SONET network is subject to
the same exacting timing requirements as traditional voice
traffic. IP packet-based communication may be asynchronous,
but it is delivered over the common TDM network infrastructure.
New timing requirements are in standards development. Clocks
will be integral to the operation of voice, data, and internet
networks for the foreseeable future.

FEI offers a portfolio of network synchronization productsall
software manageable, precisely accurate, reliable, and durable.
The flagship product is the US5G-A, the state of the art in
Central Office synchronization technology. The US5G-E is targeted
for carriers that operate in the European/International network
environment. The US5G-M retains most of the features and functions
of the A model but is designed for smaller switching
and transit node applications. It features an integrated GPS
receiver enabling it to provide a self-contained Stratum 1
reference for distribution within its service location. FEI
has recently introduced another innovative product, the UNISync
PRS. This is a compact GPS receiver system that can provide
a Stratum 1 signal reference to a co-located TSG or, if needed,
can serve as a timing distributor for up to twelve network
elements in a very small office. FEI also offers a very powerful
server-based Element Management System (EMS). LYNX is capable
of monitoring and managing a network of several hundred clock
systems and to proactively detect the degradation of synchronization
quality before a costly and disruptive system failure occurs.

These systems have been evaluated, tested, and deployed by
several of the largest telecom network operators in the world.

Space-based
The commercial use of satellites launched for communications,
navigation, weather forecasting, video and data transmissions
has led to the increased need and ability to transmit information
to earth based receivers. this requires precise timing and
frequency control of the satellite systems. For example, FEI
has provided the following products to the satellite industry: